So you got your kid a debit card, now what? 3 ways to ensure responsible swiping
Going shopping without mom or dad is a big milestone on the path toward adulthood and independence, and there’s no better way to learn about personal finance than to experience it first-hand. As more and more parents lean in to the growing popularity of teen bank accounts and debit cards for kids, it’s important to remember that these products are merely vehicles for your child’s money. Your kid is behind the wheel, but you should still be playing the role of navigator.
Debit cards are a great way for kids to learn about financial responsibility and how to make smart choices with their money, while still providing effective guardrails through app-based parental controls. If you’re ready to introduce the first piece of plastic to your child’s wallet, here are 3 ways to make that card even more powerful and to set him or her up for a lifetime of financial confidence.
1) Agree on clear boundaries and expectations
Before that very first swipe, it’s important to sit down with your child and get on the same page around how, where, and for what a card should be used. As many adults can attest, it’s a lot easier to pull out a card and swipe than it is to fumble in your wallet and count out a handful of bills and coins. However, this convenience comes at a cost. Holding physical money in your hands and handing that money over to someone else creates an emotional reaction (often a painful one) that you just don’t get when you swipe a card, which is why people tend to spend less when paying with cash compared to paying with a card. According to Experian, the average cash transaction is $22 while the average non-cash transaction is $112.
It’s also important to talk to kids about making purchases online. While it seems easy enough to just click and pay, there are a lot of factors to consider such as how reputable and secure the site they are purchasing from actually is. Are they agreeing to a one-time purchase or are they unknowingly agreeing to something that will bill them every month? And of course, one of the most important things to stress is not giving their card or personal information out to anyone, no matter how legit it seems.
2) Establish long-term goals
Sticking with the car analogy, if you have a destination in mind before you start driving, it can be easier to plan the best route to get there. It doesn’t matter if you are trying to get there as fast as possible or maybe you want to take the scenic route – if you know where you are going before you hit the road, it will make the journey a lot more enjoyable.
Take the time to ask your kids if they have any goals that they would like to make for themselves. It can be something small like saving up for a new video game or it can be something really big like saving for their first car. Or maybe you want to create a goal you can work toward together and you match every dollar they save. Whatever the goal may be, it’s important to not only talk about it together, but ask them to write it down. If it’s written down, they are much more likely to stick to it and hold themselves accountable.
3) Schedule regular check-ins and stick to them!
Just like the birds and the bees, talking about money with your kids can happen at differing levels of complexity and at multiple points throughout childhood. It’s not a one-time conversation but rather one that should evolve as often as your child does. Setting a mandatory check-in to discuss their spending, saving, and whether any of their financial-specific goals have changed is something that can happen at any cadence so long as you stick to it. If your child is used to getting an allowance every week, you could try coordinating this is with the money check-in. If that feels too often, try extending it to every two weeks similar to a paycheck. This can even provide an extra challenge for them to extend their cash over a longer period of time and practice real-world budgeting and planning ahead.
Again, the key to making the most of these standing appointments is sticking to them. Lots of apps these days provide convenient features such as automating an allowance so it transfers from your account to theirs without having to remember. Just be careful not to let the money conversation fall out of site and out of mind too. The more we talk to kids about money and walk with them on the path to financial confidence, the more likely they will reach adulthood armed with a solid financial understanding and the tools to reach their long-term goals.